Financial Highlights Lee Wai Fai Lee Wai Fai Group Chief Financial - - PowerPoint PPT Presentation

Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not to be relied upon as advice to investors or potential investors and does not take into account the investment

• bjectives, financial situation or needs of any particular investor. This material should be considered with professional advice when deciding if an investment is appropriate. UOB

Bank accepts no liability whatsoever with respect to the use of this document or its content. Singapore Company Reg No. 193500026Z

Private & Confidential Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. This material should be considered with professional advice when deciding if an investment is appropriate. UOB Bank accepts no liability whatsoever with respect to the use of this document or its content. Singapore Company Reg No. 193500026Z

UOB Group 3rd Quarter 2016 Financial Highlights

Lee Wai Fai Group Chief Financial Officer 28 October 2016

UOB Group Full Year 2016 Financial Highlights

Lee Wai Fai Group Chief Financial Officer

17 February 2017

2

2016 Highlights

FY16 NPAT of $3.1b ↓4% YoY; 4Q16 NPAT of $739m ↓7% vs 3Q16 and ↓6% vs 4Q15

• Full year total income remained stable at $8.1b.
• Operating expenses increased due to higher IT investments while staff expenses were

tightly managed

• Higher specific allowance for loans offset by a release in general allowance in line with

counter-cyclical approach

Strong balance sheet

• Gross customer loans increased 9% YoY
• Deposits grew 6% YoY
• Asset quality remains stable with new NPA formation slowing down this quarter
• NPL ratio at 1.5%; NPL coverage remained high at 118%

Capital and liquidity positions

• Capital position remained strong with fully-loaded CET1 at 12.1%.
• Leverage ratio of 7.4%, well above Basel’s minimum requirement
• Average SGD and all-currency liquidity coverage ratios of 275% and 162% in 4Q16

2016 NPAT of $3.1 billion, down 4% YoY

favourable variance to earnings unfavourable variance to earnings

2016 2015 +/(-) $m $m % Net interest income 4,991 4,926 1.3

p

Fee and commission income 1,931 1,883 2.5

p

Other non-interest income 1,140 1,238 (7.9) q Total income 8,061 8,048 0.2

p

Less: Total expenses1 3,696 3,597 2.8

p

Operating profit 4,365 4,451 (1.9) q Less: Specific allowance 991 476 >100.0 p General allowance (398) 196 (>100.0) q Add: Associates & joint ventures 6 90 (93.4) q Net profit before tax 3,777 3,869 (2.4) q Less: Tax & non-controlling interests 681 660 3.2

p

Net profit after tax 3,096 3,209 (3.5) q

• 1. One-off expenses of $67m were relating to Singapore's Golden Jubilee ("SG50") and UOB's 80th anniversary ("UOB80")

commemorative events and brand campaign in 2015. 3

4Q16 NPAT of $739 million, down 7% QoQ

4Q16 4Q15 +/(-) 3Q16 +/(-) $m $m % $m % Net interest income 1,276 1,277 (0.1) q 1,230 3.7

p

Fee and commission income 531 480 10.6

p

492 7.8

p

Other non-interest income 222 323 (31.3) q 318 (30.2) q Total income 2,028 2,081 (2.5) q 2,040 (0.6) q Less: Total expenses1 957 964 (0.7) q 918 4.2

p

Operating profit 1,071 1,116 (4.0) q 1,122 (4.5) q Less: Specific allowance 441 152 >100.0 p 299 47.6

p

General allowance (310) 38 (>100.0) q (113) (>100.0) q Add: Associates & joint ventures (21) 18 (>100.0) q 25 (>100.0) q Net profit before tax 920 944 (2.6) q 962 (4.4) q Less: Tax & non-controlling interests 181 156 16.0

p

171 5.4

p

Net profit after tax 739 788 (6.2) q 791 (6.6) q

favourable variance to earnings unfavourable variance to earnings

• 1. One-off expenses of $43m in 4Q15 were relating to UOB80 commemorative events and brand campaign.

4

Net Interest Income (NII) and Margin

Higher NII supported by loan growth

3,583 3,938 4,535 4,688 537 620 391 2016 4,991 1.71% 0.38% 2.20% 303 2015 4,926 1.77% 0.50% 2.26% 2014 4,558 1.71% 0.82% 2.06% 2013 4,120 1.72% 0.76% 2.12% Net Interest Margin (%) Interbank & Securities Margin (%) Loan Margin (%) NII from Interbank & Securities ($m) NII from Loans ($m) 1,196 1,214 1,161 1,148 1,166 4Q16 1,276 1.69% 0.55% 2.09% 109 3Q16 1,230 1.69% 0.43% 2.13% 82 2Q16 1,211 1.68% 0.25% 2.23% 50 1Q16 1,275 1.78% 0.30% 2.36% 60 4Q15 1,277 1.79% 0.40% 2.34% 81

5

Fee income up 8% QoQ from credit card, loan-related and wealth management fees

Non-Interest Income (Non-NII) and Non-NII Ratio

1,731 1,749 1,883 1,931 544 817 954 877 325 334 284 263 2016 3,071 2015 3,122 38.8% 23.4% 2014 2,900 38.9% 23.5% 2013 2,600 38.7% 25.8% 23.9% 38.1% 480 433 475 492 263 201 256 251 531 169 83 4Q16 753 53 3Q16 810 39.7% 24.1% 67 2Q16 813 40.2% 23.4% 1Q16 695 35.3% 22.0% 60 4Q15 803 38.6% 23.1% 60 26.2% 37.1%

Non-NII/Total Income (%) Fee Income/Total Income (%) Other non-interest income ($m) Trading & Investment income ($m) Fee and commission income ($m) 6

Operating Expenses and Expense / Income Ratio

^ Included one-off expenses relating to SG50 and UOB80 commemorative events and brand campaign (2015: $67m, 4Q15: $43m) and adjustment for prior year’s bonus.

522 506 521 510 514 405 442 46.3% 44.3% 1Q16 918 4Q16 894 2Q16 4Q15 409 45.0% 443 45.4% 389 47.2% 964 3Q16 927 45.8% 957 ^

Staff costs tightly managed as IT investments continue

7

1,712 1,825 2,064 2,050 1,186 1,321 1,533 1,646 2016 2015 43.4% 3,597 45.9% 44.7% 3,696 2,898 2013 43.1% 3,146 2014 42.2% 43.1%

Expense/Income Ratio (%) Staff costs ($m) Other operating expenses ($m) Expense/Income Ratio (%) exclude one-off

^ ^

8

IT investments geared towards products and digital capabilities

Data Mobility/Connectivity Regulatory

20% 4%

Security Product Capabilities

59% 17% Digital Transformation

• Mighty App
• Enterprise Data Architecture

IT investments over 2014-2016 (~$0.7b)

Increase in fee and trading capabilities Global Market Platform

Cust flow income +8%¹

Wealth Platform

AUM +8%¹

Cash Management

Transaction Banking income +12%¹

• 1. CAGR computed over 2 years (2014 to 2016)

Allowance on Loans

* On annualised basis

Total Allowance on Loans/Average Gross Customer Loans (basis points) * Specific Allowance on Loans/Average Gross Customer Loans (basis points) * Specific Allowance on Loans ($m)

969 392 238 136 19bp 12bp 8bp 45bp 32bp 32bp 30bp 32bp 2016 2015 2014 2013 428 288 121 133 115 76bp 53bp 23bp 25bp 22bp 32bp 32bp 32bp 32bp 32bp 4Q16 3Q16 2Q16 1Q16 4Q15

Higher specific allowance in 4Q16 largely from oil & gas and shipping sectors; total credit cost kept stable at 32 bps

9 57bp from existing NPLs

Movements in non-performing assets

4Q16 3Q16 4Q15 $m $m $m NPA at start of period 3,632 3,164 2,737 New NPA 387 780 626 Upgrades, recoveries and translations (320) (201) (233) Write-offs (219) (111) (64) NPA at end of period 3,480 3,632 3,066

10

NPL ratio at 1.5% with NPLs mainly from Singapore and Indonesia

Note : Non-performing loans by geography are classified according to where credit risks reside, largely represented by the borrower‘s country of incorporation/operation (for non-individuals) and residence (for individuals).

NPL ($m) 2,882 2,841 3,056 3,496 3,328 NPL Ratio 1.4% 1.4% 1.4% 1.6% 1.5%

1,116 1,067 1,395 1,614 1,291 386 401 451 466 487 249 250 264 293 360 569 564 564 565 638 218 176 303 307 344 401 206 255 245 Dec-16 Sep-16 Jun-16 Mar-16 158 Dec-15 Malaysia Singapore Others Greater China Indonesia Thailand

11

12

977 881 917 1,063 965 250 274 209 179 210 287 264 288 298 316 388 383 610 643 451 287 294 286 304 284 550 542 563 601 618 203 183 408 484 Dec-16 143 Dec-15 2,882 2,841 3,328 Mar-16 Jun-16 3,056 Sep-16 3,496

New NPLs mainly from oil and gas and shipping industries

Manufacturing Others Transport, storage and communication General commerce Housing loans Professional and private individuals Building and construction

13

• Total exposure, including off-balance sheet items, stood at SGD27.6b as of 31 December

2016

• Mainly to traders and downstream segments
• Proactive monitoring, limit management and collateral enhancement

1. Total exposure comprises outstanding loans and contingent liabilities 2. Oil and gas upstream industries include offshore service companies.

Exposure to Commodities

Dec 16 Oil and gas Other commodity segments Total Upstream industries² Traders/ downstream industries Total exposure1 SGD6.2b SGD11.5b SGD9.9b SGD27.6b Outstanding loans SGD5.3b SGD5.7b SGD7.0b SGD18.0b

5% of total loans 8% of total loans

Loan allowance coverage continues to be adequate

High general allowance driven by countercyclical approach to provisioning

2,987 3,067 2,954 2,709 773 1,219 975 770 751 3,032

1.4% 130.5%

Mar-16

266.0% 332.5% 1.2%

Jun-16

1.6%

Sep-16 3,928

118.0% 262.4%

3,837 3,929 3,783

112.4% 325.3%

Dec-16

125.6% 133.2% 1.5%

Dec-15 3,760

315.7% 1.5% General Allowance ($m) Specific Allowance ($m) Total Allowance/Total NPL (%) Total Allowance/Unsecured NPL (%) General Allowance/Gross loans net of specific allowance 14

SGD LDR (%) 91.7 88.1 91.9 89.7 89.7 USD LDR (%) 65.6 56.7 63.1 68.3 74.6 SGD LCR (%) 1 217 169 224 213 275 Total LCR (%) 1 142 139 167 148 162

Stable liquidity position

Customer Loans and Deposits; LDR and LCR

1 Average for quarters

221.7 213.5 208.4 205.6 203.6 255.3 251.0 248.2 254.8 240.5

Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Customer Deposits ($b) Net Customer Loans ($b)

85.0% 84.0% 80.7% 84.7% 86.8%

Loan/Deposit Ratio (LDR) (%) 15

Loans up 9% YoY and 4% QoQ to $226b

Dec-16

Dec-16 Dec-15 +/(-) Sep-16 +/(-) Gross Loans $b $b % $b % Singapore 125.5 116.1 8.1 120.4 4.3 Regional: 78.1 72.8 7.2 75.8 3.1

Malaysia 25.8 24.6 4.7 25.7 0.4 Thailand 13.2 11.5 15.2 12.4 7.0 Indonesia 11.9 11.5 2.7 11.6 1.9 Greater China 27.2 25.2 8.0 26.1 4.3

Others 22.1 18.4 19.6 21.2 3.8 Total 225.7 207.4 8.8 217.4 3.8

Dec-15

3% 8% 36% 18% 31% 4% 44% 56%

Group Wholesale Group Retail

Notes: 1. Loans by geography are classified according to where credit risks reside, largely represented by the borrower's country of incorporation/operation (for non-individuals) and residence (for individuals).

• 2. No significant currency translation impact.

16

Dec-16 Dec-15

57% 43%

Funding increased by 7% YoY and 3% QoQ with proactive liquidity management

Dec-16 Dec-15

14% 43% 43% 13% 45% 42%

Wholesale Funding Group Wholesale Group Retail

Note: No significant currency translation impact.

17

Dec-16 Dec-15 +/(-) Sep-16 +/(-) $b $b % $b % Singapore 178.7 168.6 6.0 178.6 0.0 Regional: 63.1 56.6 11.4 60.3 4.6

Malaysia 27.2 25.4 7.3 26.7 1.9 Thailand 13.4 12.1 10.1 12.6 6.0 Indonesia 7.9 6.6 19.0 7.0 12.0 Greater China 14.7 12.5 17.0 14.0 4.8

Others 13.5 15.3 (11.3) 12.0 12.7 Total customer deposits 255.3 240.5 6.1 251.0 1.7 Wholesale funding 40.1 34.5

16.4

34.8

15.3

Total funding 295.4 275.0

7.4

285.8

3.4

Performance by business segment

2016 2015 +/(-) Segment Operating Profit $m $m % Group Retail (GR) 1,821 1,573 15.8 Group Wholesale Banking (GWB) 2,747 2,661 3.2 Global Markets (GM) 228 280 (18.4) Others¹ (431) (62) (>100.0) Total 4,365 4,451 (1.9)

2016 2015

• 10%

5% 42% 63%

• 1%

35% 6% 60%

Others GM GWB GR 18

• 1. 2015 included one-off gains on sale of properties and investment securities.

Regional operating profit increased 2% YoY in constant currency terms

Operating 2016 2015 +/(-)

At constant FX rate +/(-)

Profit $m $m % % Singapore 2,568 2,694 (4.7) (4.7) Regional: 1,400 1,407 (0.5) 2.0

Malaysia 603 616

(2.1) 3.0

Thailand 316 283

11.4 13.7

Indonesia 170 131

30.0 28.2

Greater China 311 377

(17.5) (17.1) Others 397 350 13.3 16.1 Total 4,365 4,451 (1.9) (1.0)

2016 2015

14% 7% 4% 7% 9% 59% 6% 14% 61% 8% 8% 3% Thailand Malaysia Singapore Others Greater China Indonesia

19

Exposure to China

Bank exposure in China

• 98% with <1 year tenor
• Around 77% accounted for by top 5 domestic banks and

policy banks

• Trade exposures mostly with bank counterparties,

representing slightly more than half of bank exposure Non-bank exposure in China

• Target customers include top-tier state-owned enterprises,

large local corporates and foreign investment enterprises

• NPL ratio around 0.9%
• Around half of loans denominated in RMB
• Around 40% of the loans has tenor within a year
• Minimal exposure to stockbroking companies linked to

China’s stock market

• No exposure to Qingdao fraud and local government

financing vehicles

Note: Classification is according to where credit risks reside, largely represented by the borrower's country of incorporation/operation (for non-individuals) and residence (for individuals).

Bank, SGD13.7b

Non-bank, SGD8.5b Debt, SGD1.0b SGD23.2b

• r 6.8% of total assets

20

Dec 2016

Minimal direct impact from Brexit

• Bulk of UK non-bank exposure is secured and denominated in GBP
• Consumer mortgage book small and healthy
• Highly rated bank counterparties in the UK

Exposure to Europe

Note: Classification is according to where credit risks reside, largely represented by the borrower's country of incorporation/operation (for non-individuals) and residence (for individuals).

Dec 2016 Non-bank Bank Debt securities Total As a % of total assets Europe SGD3.3b SGD4.7b SGD1.1b SGD9.1b 3.2%

• f which UK

SGD2.4b SGD1.0b SGD0.2b SGD3.6b 1.3%

21

Capital position augmented by scrip dividend and capital issuances

Capital Adequacy Ratios (CAR)

1 Based on final rules effective 1 Jan 2018. 2 Leverage ratio is calculated based on the revised MAS Notice 637. A minimum requirement of 3% is applied during the parallel run period from 1 January 2013 to 1 January 2017.

13.0% 12.8% 13.2% 13.5% 2.6% 3.2% 2.7% 3.1% 13.1% 3.1% Dec-16 16.2% Sep-16 Jun-16 16.6% 15.9% Dec-15 Mar-16 16.0% 15.6%

CET1 Capital ($b) 26 26 26 27 28 Tier 1 Capital ($b) 26 26 27 28 28 Total Capital ($b) 31 32 32 34 35 RWA ($b) 201 202 202 205 216 Leverage ratio (%) 2 7.3 7.0 7.4 7.5 7.4

Tier 1 Tier 2 Total

22

11.7% 12.1% 12.2% 12.4% 12.1%

Fully Loaded CET 1

1

Net dividend per ordinary share (¢)

2013 2014 2015 2016 Payout amount ($m) 1,182 1,201 1,444 1,135 Payout ratio (%) 39 37 45 37

Final dividend maintained

20 20 35 35 50 50 35 35 20 2016 2015 2014 5 2013 5 UOB 80th anniversary Special Final Interim

23

UOB Group 3rd Quarter 2016 Question & Answer

28 October 2016

Question & Answer

UOB Group Full Year 2016

17 February 2017

Appendix : Performance of Major Territories

• Singapore
• Malaysia
• Thailand
• Indonesia
• Greater China

Singapore – Summarised income statement & key ratios

2016 2015 +/(-) 4Q16 3Q16 +/(-) $m $m % $m $m % Net interest income 2,683 2,728 (1.7) 673 648 3.8 Fee and commission income 1,144 1,099 4.1 317 286 11.0 Other non-interest income 763 831 (8.2) 128 214 (40.1) Total income 4,590 4,658 (1.5) 1,118 1,149 (2.6) Less: Total expenses 2,022 1,965 2.9 519 499 4.1 Operating profit 2,568 2,694 (4.7) 599 650 (7.8) Less: Allowance 260 401 (35.1) 35 101 (65.5) Add: Associates & joint ventures 55 70 (21.1) 16 14 13.9 Profit before tax 2,364 2,363

• 581

563 3.1 Customer loans (net) - $b 140.2 130.9 7.0% 140.2 133.9 4.7% Customer deposits - $b 178.7 168.6 6.0% 178.7 178.6

• Key ratios (%)

Net interest margin 1.28 1.40 (0.12) 1.23 1.23

• Non-NII/Total income

41.6 41.4 0.2 39.8 43.5 (3.7) Expense/Total income 44.0 42.2 1.8 46.4 43.4 3.0

• Normalised (1)

44.0 39.9 4.1 46.4 43.4 3.0 Loan/Deposit 78.5 77.7 0.8 78.5 75.0 3.5

26

Malaysia – Summarised income statement & key ratios

2016 2015 +/(-) 4Q16 3Q16 +/(-) RM'm RM'm % RM'm RM'm % Net interest income 1,997 1,992 0.3 502 500 0.4 Fee and commission income 660 606 8.9 185 176 5.1 Other non-interest income 299 270 10.7 67 78 (14.1) Total income 2,956 2,868 3.1 754 754

• Less: Total expenses

1,149 1,114 3.1 303 287 5.6 Operating profit 1,807 1,754 3.0 451 467 (3.4) Less: Allowance 164 229 (28.4) 32 14 >100.0 Add: Associates & joint ventures

• 2

NM

• Profit before tax

1,643 1,527 7.6 419 453 (7.5) Profit before tax (S$m) 548 537 2.0 136 150 (9.4)

Average Exchange rate 3.00 2.84 3.08 3.02

Customer loans (net) - RM'b 78.7 73.6 7.0% 78.7 76.5 2.9% Customer deposits - RM'b 84.5 77.1 9.6% 84.5 81.2 4.0% Key ratios (%) Net interest margin 2.22 2.28 (0.06) 2.16 2.18 (0.02) Non-NII/Total income 32.4 30.5 1.9 33.4 33.7 (0.3) Expense/Total income 38.9 38.8 0.1 40.2 38.1 2.1 Loan/Deposit 93.2 95.5 (2.3) 93.2 94.1 (0.9)

27

Thailand – Summarised income statement & key ratios

2016 2015 +/(-) 4Q16 3Q16 +/(-) THB'm THB'm % THB'm THB'm % Net interest income 14,371 13,143 9.3 3,707 3,613 2.6 Fee and commission income 5,948 5,868 1.4 1,611 1,591 1.3 Other non-interest income 830 719 15.4 171 261 (34.5) Total income 21,149 19,730 7.2 5,489 5,465 0.4 Less: Total expenses 13,099 12,648 3.6 3,304 3,429 (3.6) Operating profit 8,050 7,082 13.7 2,185 2,036 7.3 Less: Allowance 3,116 2,729 14.2 971 793 22.4 Profit before tax 4,934 4,353 13.3 1,214 1,243 (2.3) Profit before tax (S$m) 193 175 10.6 49 49 0.1

Average Exchange rate 25.53 24.91 24.91 25.54

Customer loans (net) - THB'b 309.3 283.3 9.2% 309.3 296.8 4.2% Customer deposits - THB'b 330.7 309.4 6.9% 330.7 320.1 3.3% Key ratios (%) Net interest margin 3.55 3.45 0.10 3.62 3.45 0.17 Non-NII/Total income 32.0 33.4 (1.4) 32.5 33.9 (1.4) Expense/Total income 61.9 64.1 (2.2) 60.2 62.7 (2.5) Loan/Deposit 93.5 91.5 2.0 93.5 92.7 0.8

28

Indonesia – Summarised income statement & key ratios

2016 2015 +/(-) 4Q16 3Q16 +/(-) IDR'b IDR'b % IDR'b IDR'b % Net interest income 3,302 2,811 17.5 853 840 1.5 Fee and commission income 774 757 2.2 206 185 11.4 Other non-interest income 513 439 16.9 102 135 (24.4) Total income 4,589 4,007 14.5 1,161 1,160 0.1 Less: Total expenses 2,944 2,724 8.1 782 701 11.6 Operating profit 1,645 1,283 28.2 379 459 (17.4) Less: Allowance 953 682 39.7 337 191 76.4 Profit before tax 692 601 15.1 42 268 (84.3) Profit before tax (S$m) 71 61 16.3 4 28 (84.2)

Average Exchange rate 9,721 9,819 9,554 9,651

Customer loans (net) - IDR't 64.3 60.1 6.9% 64.3 61.5 4.5% Customer deposits - IDR't 73.0 64.4 13.3% 73.0 66.8 9.2% Key ratios (%) Net interest margin 4.45 4.08 0.37 4.34 4.53 (0.19) Non-NII/Total income 28.0 29.8 (1.8) 26.5 27.6 (1.1) Expense/Total income 64.2 68.0 (3.8) 67.4 60.4 7.0 Loan/Deposit 88.1 93.4 (5.3) 88.1 92.0 (3.9)

29

Greater China – Summarised income statement & key ratios

2016 2015 +/(-) 4Q16 3Q16 +/(-) $m $m % $m $m % Net interest income 384 394 (2.6) 102 97 5.0 Fee and commission income 113 137 (17.9) 29 30 (1.2) Other non-interest income 152 175 (13.2) 41 43 (4.9) Total income 648 706 (8.2) 173 170 1.4 Less: Total expenses 337 329 2.4 88 83 6.1 Operating profit 311 377 (17.5) 85 88 (3.1) Less: Allowance 56 34 63.8 4 23 (80.6) Add: Associates & joint ventures 46 24 91.6 11 12 (7.8) Profit before tax 300 366 (18.0) 91 76 19.5 Customer loans (net) - $b 21.4 18.5 15.8% 21.4 21.5 (0.4%) Customer deposits - $b 14.7 12.5 17.0% 14.7 14.0 4.8% Key ratios (%) Net interest margin 1.10 1.26 (0.16) 1.06 1.12 (0.06) Non-NII/Total income 40.8 44.2 (3.4) 41.0 43.1 (2.1) Expense/Total income 52.1 46.6 5.5 50.8 48.5 2.3 Loan/Deposit 145.9 147.5 (1.6) 145.9 153.6 (7.7)

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Thank you

Thank You

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